Social housing can learn from the private rented sector to prepare for the government's new welfare reforms.

For the last 12 months, I have been travelling the country and meeting large and small social and private landlords to see what preparations they are making for Universal Credit. 

It has become obvious that private landlords are better positioned and prepared for the introduction of Universal Credit than social housing providers.

I'm a private landlord as well as a letting agent, renting properties to more than 500 local housing allowance (LHA) tenants.  Private landlords are traditionally a secretive bunch.  However, I'm a big advocate of sharing best practice and particularly keen to see how Universal Credit will affect the sector as a whole.

In April 2008, the Labour government introduced the LHA and private landlords were furious they would not receive a tenant's housing benefit direct from their local authority. 

This change did not affect councils and housing associations, which still enjoy housing benefit payment direct from local authorities, but the introduction of Universal Credit will level the playing field.

As disappointed as private landlords were, in hindsight we have a lot to thank the previous government for.  The LHA has given proactive private landlords over four year's invaluable experience developing systems and procedures for collecting rent payments direct from tenants in receipt of housing benefit. This experience has proved invaluable in preparing for Universal Credit and is something that social housing providers can only be envious of today.

From the many social housing providers I've spoken to, all are expecting increased costs associated with rent collection and an increase in rental arrears as a result of the introduction of Universal Credit. The highest estimate was an unsustainable 30% of rental income.

Many private landlords have spent the past four years working with credit unions and other rent collection organisations and have developed the foundations for what will be required from 2013.  With the increased risk of not automatically receiving housing benefit payments, landlords' referencing procedures and systems have been developing over the past four years to protect them from bad tenants and debts from arrears.

A recent meeting with one arm's length management organisation that managed 25,000 homes made it clear they were not ready for Universal Credit. The only new measure it planned to put in place was to ask all new tenants, regardless of status, for a greater amount of rent in advance of their tenancy to account for the higher risk. Do they realistically think their tenants can afford this?

The problem social housing providers have is the amount of properties they manage.  They provide housing to approximately two-thirds of all housing benefit claimants.  

Consider social housing providers like the ALMO previously mentioned with 25,000 homes: any changes they have to make will involve a lengthy and 

drawn out process which could be costly if they get it wrong.

Many providers are solely relying on credit unions for the answer.  However, with the sheer volume of tenants these providers have, lengthy and detailed feasibility studies must still be undertaken to justify whether credit unions and their additional costs are the right answer.

Private landlords are much smaller - they think on their feet, can adapt to change and move quickly.  The private landlord is like a speed boat – it's nifty and can manoeuvre easily and quickly.  In comparison, the social landlord is an oil tanker which can take hours to turn. 

This ability to change at speed, and the valuable experience gained from the past four years is why private landlords are ahead of the game – and social landlords need to catch up.